Can DEI be the driving force behind reward strategy in 2025?

How are employee expectations around fairness and inclusivity changing and what does this mean for reward and benefits strategies?

While progress may appear slow, setting targets and keeping a spotlight on diversity, equity and inclusion (DEI) is driving a change in mindset.

President Trump’s stamp-down on DEI initiatives created significant debate, which in itself shows how far things have come, and this side of the Atlantic progress is research-backed.

According to the FTSE 350 Women Leaders Review, women now hold 43% of roles on boards and 35% of leadership roles, so in terms of a top-down approach companies are seeing equality as an important factor in improving productivity and growth.

The target set by the Parker Review in 2017 for FTSE 100 companies to have at least one minority ethnic director on their board was also met by 96% before the end of 2022, and nearly half have surpassed the target.

In terms of a bottom-up approach, signs are also encouraging. Research by EY found that 63% of employees would choose to join a pro-DEI organisation, and that figure increases to 73% for Gen Z, who are spearheading appetite and expectation around DEI and pay transparency.

There is also a broad acceptance that much progress is still to be made: at the current rate it will take 33 years for the UK to close its gender pay gap and Baroness Lane Fox, chair of the British Chamber of Commerce, recently pointed out that there is only one disabled person on the board of a FTSE 100 company.

All of which points to the possibility that the low-hanging fruit is being picked off, but more work is needed if we are going to reach the top branches. So how can we get there through reward and benefits strategy?

Actively retain business leaders’ support

DEI measures have come under pressure in recent times, giving some companies an excuse to back-track. In HR, we need to work hard to raise awareness around the positive changes DEI measures can make and accentuate the desire of younger workers to open things up.

Pay gap reporting

Often viewed by organisations as a key focus, this should be the bare minimum. Any organisation only prepared to share their gender pay gap data, without an action plan commitment is likely to lose key talent from within and be less attractive to astute candidates outside.

Make pay practices more transparent

Pushing the pay transparency agenda – or at least being open to assessing our readiness to be more open on reward – can make a real difference. When reward practices lack transparency, they are more likely to enable disparity and encourage real or perceived unfairness.

Companies need to be transparent around pay and grading frameworks, define how they measure performance and contribution and make pay opportunities equal by ensuring everyone has the same chance to upskill. Finally rubber-stamp all this by publishing pay policies.

Personalise benefits

The inclusive benefits agenda is being fuelled by an increasing demand to provide benefits that meet the needs of the individual over those of the masses.

Around one in seven workers in the UK has caring responsibilities and yet many organisations fall short in this area, which is only getting tougher. According to a report by Carers UK and Age UK, by 2050 projections indicate that the world’s population of people aged 85+ will have increased fivefold, and Europe will have the oldest population in the world. Paid carer’s leave and access to EAPs are a step forward but a genuine opportunity exists to do more.

One such example is providing financial advice around power of attorneys and will-writing or providing the flexibility to maintain a successful career while still being a carer.

Enabling psychological safety through digital access to benefits

Mental health initiatives are a key priority for universal wellbeing and can help increase productivity in the long run by reducing absenteeism and staff attrition rates.

Step one is to include benefits directly supporting health and wellbeing such as gym membership, dietary advice, employee health campaigns and EAPs. Digital access to these products and services allows companies to go a step further by making them available to everyone regardless of rank or position. It can even be tailored to offer particular support to carers, part-time or deskless workers through access to online GPs or specific support programmes for parents.

Flexible working

Until now the debate on flexibility has focused on working-from-home, but real flexibility spans further than that. Work location remains a key factor (and it will be interesting to measure the long-term impact to companies who insist on back-to-office policies) but the make-up of the working week is also crucial for many in achieving a better work-life balance.

Can rotas be more agile for carers? Could a four-day week work, or other compressed hour models? Can holiday and parental leave policies be made more progressive? Away from work, it will be interesting to see how UK companies respond to the Right to Disconnect policies already in place in Ireland, Belgium and Australia.

Actively seek employee input

For this to happen, we need to involve employees in shaping reward strategy through surveys, focus groups, and feedback loops. This empowers a diverse voice to influence decisions, especially from underrepresented or marginalised groups, avoiding situations where specific events, recognition awards or social activities fall short of respecting different personalities, cultures and neurotypes.

On this latter point, diagnosis of neurodivergence is much more prevalent in schools today. According to the Association for Child and Adolescent Mental Health, autism diagnoses increased from 3,072 in 1998 to 65,665 in 2018. The ramifications of this increase carry on well into working life. By investing in training for managers we can help them identify vulnerability, and harness all the diverse strengths, skills and abilities in our teams.

Fairness, transparency and equity

In the modern working world, companies need to target and accommodate the needs of the lowest as well as the highest paid in all aspects of reward.

By making reward and benefits a key factor in discussions around DEI, we can build strategies that aim for greater fairness, transparency and equity, and progressive digital solutions are fast enabling this crucial transition.